New studies bode well for Vertex’s cystic fibrosis drug, analysts say

By Russ Britt

It seems to be near-unanimous consensus that Vertex Pharmaceuticals Inc.’s positive results for its cystic fibrosis drug will turn out to be a long-term plus for the drug maker, so look for its 40% gain in stock value to stand firm.

VertexPharma

A number of analysts seem sure that the results of Vertex’s
/quotes/zigman/79675/delayed/quotes/nls/vrtxVRTX Phase 3 studies of lumacaftor bode well for the company’s prospects of getting the medication approved by U.S. regulators. Not only that, but Vertex lumacaftor could easily be a profitable product line for the company.

Vertex expects to file for approval later this year with the U.S. Food and Drug Administration as well as European regulators after meeting primary and secondary goals in testing on the drug in combination with another medication called ivacaftor. One analyst called the results “best-case” data.

Shares were up $26.51 in recent action to $93.12.

“So with this data in hand, we expect a likely fast drug launch in [the second half of 2015] given solid price and better pricing,” analyst Michael Yee of RBC Capital Markets said in a note to clients. Yee says current models show that Vertex might be able to command as much as $175,000 for a regimen of the drug, which still is well below that of other treatments.

Mark Schoenebaum of ISI Group issued a flurry of notes to clients, saying the tests were not a “home run” but were solid. After listening to the company’s conference call, he concluded: “The data are good and will clearly support worldwide regulatory approval for this drug regimen. In the U.S., reimbursement should be straightforward. In Europe, certain countries may push back, but, in the end, we think [Vertex] will have the upper hand since patients will surely demand access to this drug regimen.”

Maxim Group’s Jason Kolbert sounded a little more tentative but still upped his price target on Vertex shares to $107 from $92.

“As we further understand the totality of the Vertex data we will review our market size calculations which may show our valuation is conservative,” Kolbert wrote.

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